Download - The world remade: COVID-19 and beyond
1 | as of 6 April 2020
The world remade: COVID-19 and beyond
2021 scenarios for resilient leaders
February 2021
As the COVID-19 pandemic and its challenges have continued into 2021,
leaders are planning for the economic impacts of the upcoming year.
The decisions leaders make in the near term will drive how their organizations are
sustained in the long term. Now is the time for leaders to take decisive action to soften
the shocks, and at the same time prepare for what may change as the future unfolds.
This document is a follow-up to the Economic Cases published in April 2020.
2 | as of 2 February 2021
Short-term scenarios for resilient leaders
The short-term scenarios in this document are designed to guide
leaders in strategic, financial, and operational planning for 2021.
Each of the scenarios posits a potential future state leading to
corresponding economic implications. These scenarios are not
predictions about what will happen nor do they express our
expectation of what should happen. Rather, they are stories
about what could happen under different conditions, designed
to frame planning discussions.
The four scenarios are based on two critical uncertainties likely
to shape economic conditions over the course of 2021: the
government response to the pandemic and its economic
consequences, and the levels of vaccine distribution and
adoption.
3 | as of 2 February 2021
Less
effectiveMore
effective
Poorly and unevenly
distributed, weak/mixed
acceptance
Will the vaccine be consistently distributed and widely accepted within and
between countries?
Will government action be timely and
effective?
Widely distributed
and accepted
Hard rain
VA
CC
INE
DIS
TR
IBU
TIO
N /
AD
OP
TIO
N
A new dawn
SunshowersEndless winter
Four scenarios for 2021
GOVERNMENT RESPONSE
6.3% 3.9% 3.6%
United StatesEuropean UnionAsia Pacific
4.5 -5.5%
GlobalSunshowers
EU:
Q1 2022US:
Q4 2021
Timing of return to pre-COVID-19 GDP by region
APAC: N/A already
achieved
Global: Q2 2021
Expected GDP growth in 2021
The year 2020 was remembered for its string of big surprises, but 2021
delivered its share of the unexpected, too. The most disappointing
surprise was that even with a growing number of approved vaccines,
reaching billions in need proved far harder than expected. The science
that created multiple vaccines in record time had been impeccable.
However, the compounding weaknesses of distribution, distrust, and
a disease that began spreading faster than human response were
implacable. But there was another surprise in store, more positive if just
as unexpected: growing political confidence in some of the world’s
largest and most influential markets. Strong government support of
business and workers in the US and strong and consistent health
mandates helped maintain economic activity despite a divided
electorate. Post-Brexit, the EU was renewed in its commitment to mutual
support to get through the pandemic. Global trade, particularly between
the east and west, was rekindled, fanning more economic growth than
pessimists had feared, even as the vaccines struggled to rein in the
pandemic. People yearned to be free of COVID and the many restrictions
it put on their lives and livelihoods, but the supports created through
effective policy bought time for the vaccines to begin to make a
difference.
4 | as of 2 February 2021
5.5% 2.5% 1.4%
United StatesEuropean UnionAsia Pacific
2.5 -3.5%
GlobalEndless winter
EU:
Q4 2022US:
Q3 2022
APAC: N/A already
achieved
Global: Q4 2021
Expected GDP growth in 2021
The hopes that marked the turn of the year turned out to be a false
dawn. Yes, there were vaccines, but ongoing distribution challenges
meant far fewer received them than was needed to control the pandemic.
Vaccine nationalism and production challenges meant that globally,
dozens of middle income countries couldn’t get enough doses of the
vaccine, and their economies suffered from both slumping supply and
demand as a result. Widespread skepticism of the vaccine meant that
even places that had access couldn’t reach herd immunity. As a result, the
pandemic and its restrictions were felt globally far into 2021.
Continued mutations of the virus spread more quickly than the vaccine,
keeping lockdowns in one place or another for much of the year. The
tensions between and within countries around effective policy to “flatten
the curve”—mask mandates, lockdowns, travel restrictions—meant
few places were able to keep the virus in check long enough to give the
vaccine a chance. By year’s end, travel, hospitality, traditional retail and
services are still suffering in much of the world, and even places that
maintained their vigilance and success in keeping case counts low (e.g.,
Taiwan, New Zealand, Vietnam, and South Korea) find that being healthy
when their trading partners aren’t keeps a lid on growth.
5 | as of 2 February 2021
Timing of return to pre-COVID-19 GDP by region
6.1% 3.3% 2.0%
United StatesEuropean UnionAsia Pacific
3.5 -4.5%
GlobalHard rain
EU:
Q3 2022US:
Q2 2022
APAC: N/A already
achieved
Global: Q4 2021
Expected GDP growth in 2021
After some initial bumps getting vaccines rolled out in early winter,
vaccination programs accelerate and are embraced, so by late spring, a
significant number of people in the advanced economies are ready to
get back to a sense of normal. There’s only one problem: normal isn’t
ready for them. Many small and medium businesses haven’t been
able to survive 12 to 15 months of pandemic. Bankruptcies become
common, debt burdens have become unmanageable, and there’s a
growing wave of defaults. The impacts are uneven, and in many places,
there are not enough jobs to go back to. Some people can no longer
afford their rent or mortgage payments and default on personal debts.
The resulting demand-side shock in some of the world’s largest
economies sends ripples around the world. Financial markets and tech
fly high, so investors are happy, but the visible gap between happy
investors and frustrated workers threatens to boil over into new waves of
populist uprising. On the streets, there’s growing dissatisfaction with
business and politics, and voters—healthy, yes, but hungry, too—are
turning again against mainstream parties and “business as usual.”
6 | as of 2 February 2021
Timing of return to pre-COVID-19 GDP by region
If 2020 seemed to be one low after another—from a global pandemic
that shut down the global economy in a matter of weeks to devastating
wildfires on multiple continents—2021 seemed to be the antidote. As
the year started, COVID vaccines were introduced in countries around
the world, and the roll-out grew increasingly effective through the spring.
Policymakers and central banks responded with strong stimulus, allowing
businesses to remain stable, to steady employment, and to maintain
consumer confidence and social cohesion. While some people
remained cautious about the vaccine, herd immunity is reached over the
summer for wealthy countries and is on track for most emerging
countries. The measures to suppress the virus open the door for
economic activity to rebound, and in some areas thrive. The result is a
wave of confidence that unlocks new business investment, new
consumer spending, and new public infrastructure. Disrupted businesses
remain challenged but are solvent with government support. By summer
and early fall, the lockdowns in most places are over. Travel has begun
and consumers are making up for lost time. Stock markets rally. There are
new protocols everywhere—immunization passports, contact tracing—
but they seem a small price to pay to people around the world already
looking forward to the new roaring 20s.
A new dawn Expected GDP growth in 2021
APAC: N/A already
achieved
7.1% 5.9% 4.7%
United StatesEuropean UnionAsia Pacific
5.5 -6.5%
Global
EU:
Q4 2021US:
Q3 2021
Global: Q2 2021
7 | as of 2 February 2021
Timing of return to pre-COVID-19 GDP by region
Ira Kalish
Chief Global Economist, Deloitte Touche Tohmatsu Limited
Contact: [email protected]
Gopi Billa
Principal, Deloitte Consulting LLP
US Leader, Market Sensing and Scenario Planning
Contact: [email protected]
Lauren Lubetsky
Manager, Deloitte Consulting LLP
Contact: [email protected]
Bill Marquard
Managing Director, Deloitte Consulting LLP
Contact: [email protected]
Andrew Blau
Managing Director, Deloitte Consulting LLP
Contact: [email protected]
8
Contacts
These scenarios for 2021 represent a range of possible economic circumstances for the
near-term future of the COVID-19 crisis. For more information, or to explore the
implications of these scenarios on the future of your organization, please contact us:
For more information about scenario planning, please also contact:
The authors would also like to thank Raj Tilwa, Consultant, and Scott Newman, Senior Consultant, Deloitte Consulting LLP,
for their invaluable contributions in preparing this material.
About Deloitte
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